IRS Vise Tightens on Expats

29 Aug

US citizens holding accounts in Israeli banks now have an extra nine days to benefit from the Offshore Voluntary Disclosure Program according to a report in the Jerusalem Post On Line.

The US Internal Revenue Service (IRS) has extended the deadline for offshore voluntary disclosure initiative requests until September 9 due to the potential impact of Hurricane Irene.

US citizens holding accounts in Israeli banks now have an extra nine days to benefit from the Offshore Voluntary Disclosure Program (OVDP) for American citizens living abroad.

The initiative has serious implications for US citizens living in Israel because most of them only became aware of the reporting issue last year, and many missed the 2009 deadline for the old OVDP.

 

Those who won’t use the opportunity face serious consequences.

 

Starting on January 1, 2013, a 30 percent withholding tax will be imposed on certain US source payments made to foreign financial institutions that did not reach an agreement with the IRS to provide annual information concerning their US account holders.

Examples for such payments include dividends and gross proceeds from the sale of assets, such as stocks and securities.

Growing numbers of US taxpayers do not want to wait for the implementation of the FACTA provisions in 2014, when Israeli banks under certain circumstances will disclosure to the IRS who their clients are.

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